Gradient thermal barrier coatings (GTBCs) were prepared by co-deposition of a tablet of mixtures of Al–Al 2 O 3 –YSZ and Yttria Stabilized Zirconia (YSZ) onto NiCoCrAlY bond coat by means of electron beam physical vapor deposition (EB-PVD). It was found that the microstructure gradually transferred from metallic bond coat to YSZ topcoat and composition distribution changed continuously through the thickness of the coating. The coating exhibited a good resistance not only to high temperature oxidation but also to cyclic corrosion. Thermal cycling tests for the coatings have demonstrated promising results of lifetimes more than 1000 cycles. A finite element method, numerical model, was employed to study the stresses developed in the coating when cooling to 50°C from a stress-free state at 850°C. The results demonstrate that the Al 2 O 3 –YSZ graded layer in the GTBC provided a large reduction in stress and stress gradient. Furthermore, the gradient layer is the crucial location that determines the lifetime of the gradient coating.